The Cochlear Limited share price is climbing on a new product approval

Is Cochlear Limited (ASX:COH) the best blue-chip on the ASX?

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Shares in market-leading hearing implant manufacturer Cochlear Limited (ASX: COH) are up 33% over the course of 2017 and nearly 7% since June 13 2017 when the company gained U.S. FDA regulatory approval for its new Nucleus 7 Sound Processor.

FDA approval for any significant new product is always a welcome moment for medical device businesses and Cochlear is no different in this sense.

The N7 processor is said to be superior to the N6 as, inter alia, it is iPhone and iOS app compatible and its telecoil is optimised for loops. Notably, it is the competitive聽advantage聽derived from Cochlear's new聽technologies that has聽allowed it to grow profits at consistent double-digit rates over a long period of time.

As such the stock trades on around 40x analysts' estimates for earnings per share of $3.86 in FY 2017, which may sound expensive until you consider that FY 2018 is only days away.

For the next financial year analysts' expect another year of double-digit growth as the company's (recurring revenue) services businesses continues to grow, alongside its core business of selling hearing implants to new patients.

As such I described Cochlear shares as one of the best presents you could buy the kids at Christmas thanks to their real-deal long-term growth potential.

Cochlear shares聽continue to eviscerate聽the returns of other popular blue chips like Commonwealth Bank of Australia (ASX: CBA),聽Telstra Corporation Ltd (ASX: TLS) or even BHP Billiton Limited (ASX: BHP).

In fact just over 2017 Cochlear's returns of nearly 35% are heading towards matching what anyone would have earned聽from holding BHP shares since 1999!

As a memory aid, below is a chart of the respective companies' performance since 1999.

Chart: Cochlear share price performance versus BHP, Telstra and Commonwealth Bank (Source: Google Finance).

In investing it often pays to focus on what won't change, rather than trying to work out what might change.

And I expect Cochlear's tailwinds and competitive advantages will see聽it continue to outperform the market in the five years ahead.

At $160.20 it sells for 37x analysts' estimates for FY 2018聽and for anyone looking to build a diversified portfolio of the best quality ASX shares it should be at the top of their shopping list.

Of course Cochlear carries risks around valuation, its competitive environment and product quality, so you must look to the other high-quality blue chips of tomorrow on the ASX to diversify your risk.

Motley Fool contributor Tom Richardson owns shares of Cochlear Ltd. You can find Tom on Twitter @tommyr345 The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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